10 Myths About Bankruptcy
Most people have at least some wrong information about bankruptcy. Well meaning
and well intentioned friends, family members and co-workers often supply some of the
wrong information. We hope that by giving you this information, we can help you to
determine whether bankruptcy is the right course for you.
Myth 1: Bankruptcy is difficult
While there are many rules in bankruptcy and the process may seem confusing, it is not
so difficult that you should avoid the benefits which bankruptcy can provide you. If you
have a competent and experienced lawyer representing you, you should feel
comfortable. The process should be straight forward for most individuals.
Myth 2: If I file, I will lose all my property and everything I have.
Not true. Because of several exemptions built into the bankruptcy law, most people
who file for bankruptcy protection do not lose any property at all. Those with nonexempt
property can usually keep their property if they agree to pay back some or all of
their debt.
Myth 3: If I file, I will never get credit again.
It is possible to rebuild your credit after filing bankruptcy. When a person is already in
need of filing bankruptcy, their credit report is usually in bad shape.
Myth 4: If I am married, both spouses must file together.
Not true. One spouse can file without the other spouse. In Fact, in many cases it
makes sense for only one spouse to file. We have filed hundreds of cases where a
husband or a wife, but not both have filed Bankruptcy.
Myth 5: My bankruptcy will hurt my spouse’s credit.
When one spouse files for bankruptcy protection, his or her spouse’s credit is generally
not affected.
Myth 6: Bankruptcy will not help me because I owe taxes.
While it is true that some taxes will not be discharged, others can be. There are many
rules concerning taxes which an attorney can explain to you including repayment of only
a portion of the taxes owed.
Myth 7: Only deadbeats file bankruptcy.
Not true. Most of the people who file are good hardworking people. Congress didn’t
create the bankruptcy laws to help the bad guys. When good people have serious
financial problems, they owe it to themselves and their families to consider bankruptcy.
Good people, who realize that they have a duty and a responsibility to put their families
first, file bankruptcy. You’re completely wrong if you think that you’re a deadbeat if you
file for bankruptcy. If you need to file, filing bankruptcy is actually one of the most
positive, responsible and honest steps you can take on behalf of your family.
Myth 8: Many people think you can only file bankruptcy once in a lifetime.
Under the new bankruptcy laws, it is more difficult to file multiple times, but it is
definitely still possible.
Myth 9: You can pick and choose which debts and property to list in your
Bankruptcy.
Sorry, but you can’t. It is against the law. When you file Bankruptcy you must list all
your property and all your debts. Many people want to leave out a debt because they
want to keep paying on it. With a car, truck, or home mortgage or loan, you can keep
on paying the same every month, and as long as you keep the property properly
insured, the creditor will accept the payments. In some circumstances, we are able to
reduce your mortgage and/or car payments by paying the same through a Chapter 13
Plan.
Myth 10: Even if you file for bankruptcy, creditors will still harass you and your family.
Nothing could be further from the truth.
The minute your bankruptcy case is filed, the Bankruptcy Court issues an order telling
all of your creditors to leave you alone, or else. This order is called the “automatic
stay”. This Order prohibits creditors from taking any action against you. Even better, if
a creditor violates the automatic stay, you have the right to bring the creditor before the
Bankruptcy Court and seek sanctions and compensation from the creditor for violating
the “automatic stay”.
